1. W Travel Agency specializes in flights between Los Angeles and London. It books passengers on United airlines at $900 per round-trip ticket. Until last month, United paid W a commission of 10% of the ticket price paid by each passenger. This commission was Ws only source of revenues. Ws fixed costs are $14,000 per month (for salaries, rent, etc.) and its variable costs are $20 per ticket purchased for a passenger. This $20 includes a $15 per ticket delivery fee paid to Fedex. Each round trip ticket is delivered separately. United has just announced that they will now pay 10% commission per ticket up to a maximum of $50. Any ticket costing more than $500 generates only the maximum $50 per ticket. 1. Under the old 10% commission structure, how many round trip tickets must W sell each month (a) to break even and (b) to earn an operating income of $7,000? 2. How does Uniteds revised payment schedule affect your answers to (a) and (b) in requirement 1? Question 2 2. The Flora-Bama is a take out food store at a popular beach resort. Joan, owner of the Flora-Bama, is deciding how much refrigerator space to four different drinks. Pertinent data on these four drinks are as follows: Cola Lemonade Punch Orange Juice Selling price per case $ 18.80 $ 20.00 $ 27.10 $ 39.20 Variable cost per case $ 14.20 $ 16.10 $ 20.70 $ 30.20 Cases sold per foot of shelf space per day 25 24 4 5 Joan has a maximum front shelf space of 12 feet to devote to the four drinks. She wants a minimum of 1 foot and a maximum of 6 feet of front shelf space for each drink. 1. Compute the contribution margin per case for each type of drink. 2. A co-worker of Joans recommends that she maximize the shelf space devoted to those drinks with the highest contribution margin per case. Evaluate this recommendation. 3. What shelf space allocation for the four drinks would you recommend for the Flora-Bana? Show your calculations